The recommendations from the Ottawa Chamber of Commerce come ahead of next month’s release of an implementation plan for the city’s new economic development strategy.
That plan has been drafted without much input from the business community, according to the chamber’s executive director, Erin Kelly.
“We literally have been banging down the door to get in and be heard,” said Ms. Kelly. “We don’t feel the consultation has been adequate.”
At issue is Ottawa’s approach to high tech and whether the emphasis on Ottawa’s largest industry is taking away from other strong sectors, such as tourism.
There are also questions about how the city helps new businesses grow into mid-sized companies.
To the chamber, there is not enough support for firms just outside of the startup phase, setting these companies up to fail or to sell to buyers outside the region.
The chamber advocates attracting investors able to provide mezzanine financing, since companies just out of the startup phase have ever-diminishing access to angel funding and venture capital.
OCRI numbers show 175 new companies were added in 2010 to its Ottawa Tech Database, a list of 1,800 companies, many of which are startups. That is a net increase of 87 firms over 2009, when 225 firms were added.
Even though the pace of startup growth has slowed, OCRI chief executive Claude Haw said it is small firms that drive job growth in the region.
“Big companies have consolidated and downsized, not just to weather economic downturns but also to be competitive,” he said. “It’s small companies that are delivering new products for the best potential.”
OCRI recently put in place a $2-million regional innovation centre to support firms just out of the startup phase, but Ms. Kelly says it will only have value if it has targets in place before doing its work.
“If people want money from the city, they should have to put together a business case. Let’s not have $2 million and (automatically) give it to OCRI,” she said.
“I think any dime from the city should be accounted for, even if you want $50,000.”
Meanwhile, Ottawa’s tourism sector is still searching for a permanent source of funding – a void the chamber believes the city has a role in filling.
When the harmonized sales tax was introduced in 2010, Ottawa Tourism – which was mostly funded through a “destination marketing fee” added on to the price of hotel rooms – saw the funding disappear as the taxes on hotel rooms grew from five per cent to the blended 13 per cent.
That left Ottawa’s chief tourism generator without the money to keep going until the province stepped in with a special $7.6 million in funding slated to run out at the end of 2012.
“Tourism is one of our biggest industries, but the city doesn’t invest in it at all,” Ms. Kelly said.
The problem, she said, is in the city’s approach.
Instead of funding 40 festivals across Ottawa, Ms. Kelly suggested the city restrict its financial support to the best-performing five to 10, and focus efforts on bringing in tourism dollars from outside Ottawa, rather than having the money circulate within the city.
“We’re known as the capital city of festivals, but the problem is when you look at the economic return on festivals, it is very low.”